The Lie of Green Numbers
You’ve just closed your fiscal year. Revenue is on target, even slightly above your goals. Your accountant reports a positive result. You breathe a sigh of relief. The agency is running smoothly.
And yet, something is amiss.
Your cash flow is constantly tight. Some months, you wonder how you’ll make payroll. You feel like you’re always running but never truly getting ahead. And most importantly, you don’t understand: with all this revenue, where is the money going?
Welcome to the very exclusive club of agencies that are profitable… on paper. Industry studies show that on average, nearly 15% of billable hours are never actually billed in service companies. Even worse: in service firms that do not accurately track their billable hours, the loss can reach up to $50,000 in annual revenue per employee.
The worst part? These losses are invisible. They don’t appear in any Excel spreadsheet. Your chartered accountant doesn’t see them. Neither do your partners. But they are there, very real, and they silently undermine your profitability.
#1: Ghost Time that Kills your Margin
The Principle: What You Don’t See Costs You a Fortune
Let’s talk cash. You sell a project for €50K. You budget 400 production hours. You deliver. The client is happy. Project completed, right?
Not really.
Because your teams spent 530 hours on this project. Except that 130 hours don’t appear anywhere. Why? Because they were never logged. Or because they were “absorbed” into other budget lines. Or because your employees worked evenings and weekends without reporting it, just to avoid blowing the budget.
At an average hourly cost of €70 (including overhead), these 130 ghost hours represent a net loss of €9,100. On this project, which was supposed to be profitable. Multiply that by 20 projects in a year, and you’ve just lost €182,000 without even realizing it.
According to recent studies, the numbers are ruthless: 15% of billable activities slip through the cracks in professional service companies. One sixth of your production capacity simply vanishes. The main culprits? Never-ending internal meetings, quick “last-minute” adjustments that weren’t budgeted, unexpected client back-and-forth, and administrative tasks that clog up production time.
And the worst part is, everyone thinks it’s normal. “That’s just how it is,” they tell you. “You have to satisfy the client.” Except that satisfying the client at your own expense is not a business model. It’s a slow bleed.
The solution: track every hour as if your survival depended on it
The first step is to ENFORCE exhaustive time tracking. Not “when you remember.” Not “roughly.” Exhaustive. Every hour spent on every project must be tracked, including meetings, adjustments, and endless approvals.
You’ll hear resistance: “It takes too much time,” “We’re not a factory,” “It stifles creativity.” Translate that as: “I’d rather not know I’m losing money.” Because that’s exactly what’s happening. Without rigorous tracking, you’re flying blind.
Next, analyze the gap between budgeted time and actual time on EVERY project. Not at the end of the year when it’s too late. Do it along the way. You sold 400 hours and you’re already at 350, but you’ve only delivered 60% of the project? Houston, we have a problem. There’s still time to refocus, renegotiate an amendment, or reallocate resources.
Identify your chronic time thieves:
- Unprepared meetings that last twice too long
- Vague client briefs that generate 10 rounds of revisions
- Cascading approvals that tie up teams
- “Small adjustments” that turn into complete overhauls
Then ruthlessly track down these leaks. A meeting without an agenda? Canceled. An incomplete client brief? Production doesn’t start until it’s clarified. Lingering approvals? Implement an automatic deadline. Out-of-scope adjustments? Systematically bill them as an amendment.
The result? You FINALLY know how much each project truly costs you. No more unpleasant surprises. No more “we thought we were profitable.” You KNOW. And you can act accordingly.
#2: Pre-Sales, the Invisible Financial Sinkhole
The Principle: You Pay to Lose Bids
Let’s be honest: how many hours do you spend on responding to bids, pitches, and free preliminary projects to “convince the prospect”?
Do the math for the last quarter. You’re in for a shock.
A 40-person agency dedicates an average of 15 to 25% of its production capacity to pre-sales. We’re talking thousands of hours per year. Entire days spent preparing detailed proposals, designing mock-ups “to give an idea,” drafting complete strategies… for clients who ultimately sign with a competitor or never sign at all.
Your conversion rate on opportunities? If you’re honest, it’s around 30-40%. That means 60 to 70% of your pre-sales investment goes directly into the trash. Or worse: it enriches the competitor who snatches the deal with YOUR ideas.
According to a study on consulting firms published by Business Plan Models, the Customer Acquisition Cost (CAC) represents between 10 and 18% of the revenue generated per client, including prospecting, marketing, pre-sales, and non-billable time. For a company generating €3M, we’re talking about €300,000 to €540,000 that evaporates annually in the sales cycle. That’s the equivalent of 5 to 9 full-time salaries working to secure contracts.
And the worst part? You don’t even account for them as a loss. “It’s the cost of business development,” you tell yourself. Except that business development can be measured, managed, and made profitable. Here, you’re casting a wide net, hoping a few drops land in the right place.
What really works: stop working for free
First rule: EVERYTHING is billable, or almost. The situation audit? Billable. The preliminary study? Billable. The strategic recommendation? Billable. Even at a discounted price, even symbolically, but billable.
You’ll object: “But prospects will never pay for pre-sales!” False. BAD prospects don’t pay. The good ones, those who respect your expertise and have a real budget, are perfectly willing to pay for a scoping phase. Besides, those who refuse are usually the ones who will give you the most trouble later.
Implement a STRICT opportunity qualification system. Before mobilizing your teams to respond to a bid, ask yourself three questions:
- Is the budget real and appropriate? (not “we’ll see based on the proposals”)
- Is the decision-maker identified and accessible? (not “the committee will decide”)
- Do we have a real competitive advantage on this project? (not “we’re just trying our luck”)
If you answer “no” to any of these questions, walk away. Your time is worth more than that.
Next, standardize your responses for “average” opportunities. Create reusable modules, proven templates, and client case studies that can be easily integrated. The goal: to cut the time spent on a standard proposal by two-thirds. Reserve custom work for the TRULY great opportunities, where you have a real chance.
Systematically bill for diagnostic phases, even at a reduced price. A €2,000 billed audit that takes you 2 days is better than a free audit that takes you 3. The prospect is financially committed, takes you seriously, and you recover at least part of the investment. Bonus: if you don’t win the project, at least you haven’t lost everything.
Finally, track your conversion rate and your customer acquisition cost. How many qualified opportunities do you convert into signed projects? How many hours do you invest on average to land a new client? What is the average revenue per client won? These three metrics instantly tell you if your sales engine is healthy or if it’s costing you more than it’s bringing in.
The result? You stop working for free for prospects who will never sign. You focus your efforts on REAL opportunities. And your pre-sales finally becomes a profitable investment rather than a financial drain.
#3: Zombie Projects that Drain your Resources
The Principle: Projects that Never Die
You know them. Those projects that should have ended three months ago. That have been “almost finished” for six weeks. Where the client asks for “one last small adjustment” every two weeks. Where your teams still spend “a few hours” here and there to “finalize the last details.”
Officially, the project is delivered. Billed. Settled. But in reality, it continues to drain resources. A dev who fixes a bug “real quick.” A project manager who checks in with the client “to make sure everything is running smoothly.” A graphic designer who adjusts “a few minor things” on the visuals.
Multiply these “few hours” by the number of zombie projects in your agency. What does that represent? One full-time equivalent? Two? More?
Studies on the subject are rare but enlightening: in agencies that don’t formally close their projects, 10 to 15% of production capacity is absorbed by unbilled post-delivery interventions. For a 40-person agency, that represents the equivalent of 4 to 6 full-time employees working on projects that are supposed to be finished.
The problem is that these hours are invisible in your management. They don’t appear as project time since the project is “finished.” They aren’t budgeted because “it’s just customer service.” Result: they disappear into the limbo of your reporting. But they still weigh down your actual profitability.
Even worse: they set a precedent. The client has understood that they can get free adjustments. Your teams have internalized that “finishing a project” means nothing since they’ll be back on it anyway. And you, you find yourself with resources tied up on old work when they should be on new.
The remedy: close for good
Establish a formal closing procedure. A project is only complete when:
- All deliverables have been approved by the client (with their signature, not just a verbal “ok”)
- The final invoice has been issued AND paid
- A closing meeting has formally acknowledged the end of the assignment
- The project has been administratively closed in your tools
Before this formal closing, EVERYTHING remains open. After? EVERYTHING is closed. A post-closing request = new order = new billing. No gray areas, no exceptions.
Clearly define in your contracts what falls under warranty (corrections of actual bugs within the agreed period) and what constitutes a new service (developments, adjustments, new requests). You cover the warranty. You bill for the rest. Period.
Train your teams to say NO. Your employees are kind, they want to do well, they don’t want to disappoint the client. Result: they accept “small requests” that are never small. Teach them to respond: “My pleasure! I’ll prepare a quote for this additional request, and we’ll get organized.”
Implement systematic amendments for any post-delivery request exceeding 2 hours of work. No “we’ll see at the end.” No “we’ll work something out.” As soon as the client goes out of scope, you issue a purchase order. Does that seem heavy-handed? It’s just professional. And incidentally, it allows you to remain profitable.
The result? Your projects truly end. Your resources are available for new billable assignments. Your clients respect the contractual scope. And you stop bleeding money on ghost interventions.
#4: Chronic Underpricing
The Principle: You Undervalue your Expertise without Realizing It
Trick question: on your last project, how many days did you sell? And how many did you actually use?
If, like 90% of agencies, you sold 30 days and consumed 38, congratulations: you just gave away 27% of your margin. And that’s only counting the hours you tracked. If we add the ghost time we mentioned earlier, you’re probably closer to 40-45%.
Underpricing isn’t always intentional. Sometimes, it’s just that you estimate poorly. You think a project will take 200 hours, but it takes 280. Normal, you might say. Except that if ALL your projects consistently run over by 30 to 40%, the problem isn’t in execution. It’s in your pricing model.
The reality on the ground is undeniable: agencies that don’t master their initial estimates suffer an average erosion of 25 to 35% on their actual operating margin compared to their theoretical margin. Each project sold progressively becomes unprofitable as it is executed.
But there’s worse than accidental underpricing: “strategic” underpricing. You know, those moments when you tell yourself, “we’ll cut the price to get in with this client,” “we’ll make a commercial gesture because it’s a promising sector,” “we’ll match the competitor even if we know we’re losing money.”
The reasoning seems sound: lose a little today to gain a lot tomorrow. Except that “tomorrow” never comes. The client who negotiated a 30% discount continues to negotiate on every new project. The “anchor client” who was supposed to open up a sector ultimately remains an isolated case. And meanwhile, you’ve tied up your best teams on unprofitable projects instead of seeking out profitable clients.
The shift to make: sell at the right price
First absolute rule: calculate your REAL cost price. Not the theoretical cost “if everything goes well.” The actual, historical, observed cost. Analyze your last 20 similar projects. How many hours did they truly consume? What was the average overrun rate? What was the proportion of non-billable time?
This actual cost price is your floor. Below it, you lose money. Period. It doesn’t matter if the client is “strategic” or the project is “prestigous.” If you sell below your cost price, you’re paying the client to work with you. That’s your right. But own it consciously.
Next, SYSTEMATICALLY include a 20 to 30% safety margin in your estimates. You think it will take 200 hours? Sell 250. “But the client will never accept!” Yes, they will. And if they don’t, it means they don’t have the budget for a project of that magnitude. It’s better not to start than to accept an unprofitable project that will drain your resources.
Refuse structurally unprofitable projects. Yes, even the CAC 40 one. Even the one that “would look good as a reference.” Even the one where “the CMO is a friend.” An unprofitable project doesn’t magically become profitable. It just drains your cash flow and ties up resources that could be on healthy projects.
Implement an early warning system for budget overruns. As soon as you reach 70% of the budget consumed while having delivered only 50% of the project, you trigger a review. Either you renegotiate the scope, or you bill for an amendment, or you cut your losses. But you don’t wait until you’re at 150% of the budget to react.
The result? You finally sell at the right price. Your projects are structurally profitable from the moment of signing. You stop subsidizing your clients with your cash flow. And when a project ends, you have TRULY earned money, not just on paper.
Furious saved us 10% of the agency's overall time. That might seem small, but as we grow, it's huge. There are many things we automated thanks to Furious. And above all, automation and regular indicators made a big difference.
#5: Piling up Tools and Subscriptions
The Principle: Death by a Thousand Small Charges
How many SaaS tools do you pay for each month? Seriously, how many?
If you’re like 95% of agencies, you have no idea. There are the “official” tools you know: CRM, project management tool, office suite. And then there are all the others. The ones that So-and-so subscribed to because they needed it for a project. The ones you tested six months ago and never canceled. The ones you’re paying for twice because three teams subscribed to the same service without communicating.
Try this exercise: review all your bank debits from the last three months. Add up all the SaaS subscriptions. You might be in for a shock.
A Gartner study reveals that service companies waste an average of 30% of their SaaS spending on unused licenses, duplicates, or underutilized tools. For a 40-person agency spending €4,000 per month on tools, that represents €14,400 going up in smoke each year. Not to mention the time lost navigating between fifteen different tools that don’t communicate with each other.
But there’s something worse than duplicates: the Frankenstein effect. You have one tool for CRM. Another for quotes. A third for scheduling. A fourth for time tracking. A fifth for invoicing. A sixth for purchasing. A seventh for oversight.
The result? No one has the big picture. To get a profitability figure for a project, you have to manually cross-reference data from four different tools. To track the progress of a sales opportunity, you have to juggle between the CRM and the quoting tool. To manage your cash flow, you have to export three Excel files and pray the formulas hold up.
This digital patchwork costs you a fortune. Not just in subscriptions. In human time. In data entry errors. In decisions made based on incomplete or outdated data. In missed opportunities because you don’t have the right information at the right time.
The action plan: Declutter your tech stack
Conduct a comprehensive audit of your technology stack. List ALL the tools and subscriptions you pay for. For each one, ask three questions:
- Is it truly used? (not “we could use it,” but actually used daily)
- Is it indispensable? (if we removed it tomorrow, what exactly would stop working?)
- Does it duplicate another tool? (even partially)
Anything that doesn’t pass these three filters: immediate cancellation. You’ve probably just freed up 20 to 30% of your SaaS budget.
Next, prioritize consolidation over dispersion. An all-in-one tool that covers 80% of your needs is often better than five specialized tools that each cover 100% of a need but don’t communicate with each other. The operational efficiency you gain by centralizing largely compensates for the loss of a few niche features you weren’t really using.
Implement a validation process for any new subscription. An employee wants to test a new tool? Great, but it must go through a formal validation process to ensure we don’t already have a tool that does the job and that the ROI is demonstrable. No more rogue subscriptions turning into forgotten memberships.
Negotiate your contracts. Most SaaS providers offer inflated public prices with significant negotiation margins. Paying for 10 licenses? Ask for a volume discount. Been a client for three years? Ask for a concession. Hesitating between competitors? Leverage the competition. You can often get 15 to 30% off just by asking.
The result? You know exactly what you’re paying for and why. You stop funding ghost licenses. You gain operational efficiency by simplifying your stack. And you recover several thousand euros per year that were foolishly spent on unnecessary subscriptions.
Regain control (before it’s too late)
These five sources of leakage collectively represent between 20 and 40% of your theoretical profitability. Read that sentence again. Between 20 and 40%. That’s colossal.
Did you think you were making a 15% operating margin? In reality, you’re probably between 5 and 10%. Did you think you were breaking even? You might be in the red without knowing it. Did you think you were generating cash? It’s going up in smoke before it even reaches your account.
The worst part is that these losses are silent. Your accountant doesn’t see them because they don’t appear in the books. Your partners don’t see them because they look at revenue and net profit. Your teams don’t see them because they’re just doing their job as best they can.
But YOU, you need to see them. Because it’s your responsibility as a leader to manage real profitability, not imagined profitability.
The three questions to ask yourself right now:
- How many actual hours (not budgeted, ACTUAL) have my teams spent on my last five projects?
- What portion of my production capacity goes into unbilled pre-sales?
- How many ‘completed’ projects continue to drain resources without being billed?
If you can’t answer these three questions precisely, you’re flying blind. And flying blind works as long as the road is straight. But at the first turn, you’ll crash.
It’s time to regain control.
Stop managing your agency by guesswork. Stop discovering your results two months after closing. Stop hoping that ‘it will eventually work out’. Implement a management system that gives you the TRUE picture of your profitability. In real-time. On every project. For every client.
Because an agency that doesn’t know its real costs is an agency heading for disaster. Maybe not today. Maybe not this month. But inevitably, the awakening will be brutal.
You deserve better than that. Your teams deserve better than that. Your company deserves better than that.
So, what do we do? Do we continue to lose money without knowing it, or do we take back control?
